O'Bannon Publishing Company is an Indiana corporation that is in the business of newspaper publishing and commercial and consumer printing. O'Bannon's printing enterprise is operated under the trade name Corydon Instant Print (CIP), which has been in business for over 20 years. About 30 percent of CIP's business is from walk-ins, with the remainder from business accounts for items such as brochures, newsletters, stationery, and business cards. Saundra O'Bannon is the CFO and vice chairman of the board for O'Bannon. She is also in charge of human resources. In 2007, while searching for a manager for CIP, Sandra O'Bannon was introduced to Elizabeth Mayne, who had been operating a similar printing business in Louisville, Kentucky for some time. Mayne was in the process of closing her business and accepted a written offer of employment from O'Bannon. The offer was made contingent upon Mayne signing a non-compete agreement. Mayne executed the employment agreement and covenant not to compete (the employment agreement) on March 12, 2007 and received a $1,000 signing bonus. The contract provided in part:

"That upon the termination of the employment relationship between the Employee and the Corporation, the Employee will not directly or indirectly engage in any activity that competes with the Corporation in the printing business in Harrison County, Indiana or Crawford County, Indiana for a period of five (5) years following such termination of employment."

Mayne began working as the manager of CIP on March 12, 2007. In addition to supervising one to two employees, Mayne was tasked with, among other things, increasing sales and revenue, securing competitive pricing from vendors, providing top-quality customer service, and pricing printing jobs. In particular, Mayne was the go-to person for CIP's business customers, as she offered direct, personal assistance to them. According to Mayne, she "gained the respect of many in the community along the way" and "customers loved her." Mayne knew CIP's business clients and their printing needs well, and she maintained files on many of them. On or about August 30, 2011, O'Bannon provided Mayne with an employee handbook, and Mayne executed a document acknowledging receipt of it. The handbook made clear that its purpose was to "provide employees with general guidelines regarding the current programs, policies, and benefits" and, further, that the handbook and any other policy statement "are not to be considered as contracts of employment for any specific period of time or for so long as certain conditions or circumstances exist, nor are they intended to contractual obligation of any kind, either express or implied."

On May 28, 2012, Mayne resigned as manager of CIP. She allegedly took customer files with her and deleted certain files from the company computer. Further, in the months leading up to and then after her resignation, Mayne engaged in business activity in competition with O'Bannon under the trade name To Go Words until August 2012. She also negotiated an agreement to purchase Old Capital Printing Co. from Clifford Gunther, whom Mayne had previously contacted on O'Bannon's behalf to purchase Gunther's business. Mayne and Gunther's purchase agreement took effect on September 4, 2012. Old Capital is a direct competitor and is within one-half mile of CIP.1

Can O'Bannon prevent Mayne from operating Old Capital under Mayne's covenant not to compete? Explain and support your answer.

Answer rating: 100% (QA)

Whether OBannon can prevent Mayne from operating Old Capital under the covenant not to compete depends on various legal factors particularly the enfor... View the full answer